Can we retire please? How much money do you really need need?

[Minxy]

I think it is fair that those who opted out get a smaller pension those still opted in. When you opt out it goes alongside running a seperate , usually workplace, pension. The money you would have paid into the state system is paid into a private pension instead. When you opted out you gambled that your private pension would perform better than the state pension. Now which one did best I do not know. I do remember initially being advised to opt out which I did, then the advice changed to opting in which I also did.

Totally agree, people seem to forget and 'moan' about getting a reduced SP but forget to include their work pension which will usually take them much higher than the max SP figure.

I have no issue at all with having a reduced SP because of being contracted out as my work pension will more than make up for the 'shortfall' in the SP but it's the difficulty in finding out HOW to make up my SP if I want to without lots of messing about that is frustrating, and can be confusing too, so will likely put a lot of people off even trying.

 

[The Wino]

Exactly, sometimes you need to take a step back to see the wider picture.

I do think there should be a stepped system that allows for anyone involved in heavy manual work to retire earlier.
But that’s never going to happen

I disagree on that one its like people doing jobs in some of the emergency services. Yes they will reach a point where they can't do the physically demanding part of the job but there ought to be a point where you would suggest retirement but I would suggest redeployment to a less physically demanding job.

 

[Nasher]

I have no issue at all with having a reduced SP because of being contracted out as my work pension will more than make up for the 'shortfall' in the SP but it's the difficulty in finding out HOW to make up my SP if I want to without lots of messing about that is frustrating, and can be confusing too, so will likely put a lot of people off even trying.

When I did mine, I worked out what I needed to do - in my case pay for 2 years additional, as paying for a third year would have only put a few pence per week on my pension. I also worked out the total I needed to pay

I then telephoned the pension service in order to get the sort code, account & reference number to pay the additional contribution

The lady who took the call, once she had my details, told me exactly what I should do (i.e only pay 2 years as a third year wasn't worth it) plus the amount I needed to pay

I didn't need to work anything out myself (although, I already had) it was all done in a 90 second phone call

She also informed me that the transaction could take up to 12 weeks to appear on my state pension forecast - it was there after about 6 weeks

Given that Covid may mean reduced staffing levels, I'm guessing it may take a bit longer to get through.... But it was really very easy

Hope this helps

 

[Garfields]

Exactly, sometimes you need to take a step back to see the wider picture.

I do think there should be a stepped system that allows for anyone involved in heavy manual work to retire earlier.
But that’s never going to happen

Silver-Fox agree with you on that one
Seen a lot of guys in their mid to late fifty's that work in construction and their body's are worn-out.
Most are on short contracts and find when they try for their next contract they stop getting offered work.
It's a hard way to make a living and if you have not saved/invested enough to retire early you are stuffed
There was good reason that police/fire service used to be able to get pensions after thirty years.
Personally I started in the motor trade but moved to other things fairly quickly.
I cant think I would have been fit to still be doing the stuff we had to at near retirement age. Crawling under a truck in the snow in January was never fun

I only Know of two people I worked with that are still on the tools other than as a hobby

 

[Ivory55]

I disagree on that one its like people doing jobs in some of the emergency services. Yes they will reach a point where they can't do the physically demanding part of the job but there ought to be a point where you would suggest retirement but I would suggest redeployment to a less physically demanding job.

Yes and no, trying to change type of work when older is not that easy as your skills are nothing like what they need in today’s world.

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[Silver-Fox]

Silver-Fox agree with you on that one
Seen a lot of guys in their mid to late fifty's that work in construction and their body's are worn-out.
Most are on short contracts and find when they try for their next contract they stop getting offered work.
It's a hard way to make a living and if you have not saved/invested enough to retire early you are stuffed
There was good reason that police/fire service used to be able to get pensions after thirty years.
Personally I started in the motor trade but moved to other things fairly quickly.
I cant think I would have been fit to still be doing the stuff we had to at near retirement age. Crawling under a truck in the snow in January was never fun

I only Know of two people I worked with that are still on the tools other than as a hobby

Im a carpenter and at 61 having done a day or two joist work or roofing I know I’ve done a days work.

Edit
Normally carpenters would move on to be foremen and site agents.

Ive already been and done it.
I couldn’t cope with tradesmen that didn’t give a toss about quality of finish.
Or those that couldn’t be bothered to turn up.
So I knocked that on the head.

 

[Pablo19]

Hmm, I'm a bit confused by the state pension info above. I just logged onto the government gateway and this tells me I have 42 years of full contributions and my pension forecast is £175.20 which is the max and . I know I contracted out of SERPS for a few years (can't remember how many now) so presumably I will need to replace those years. The other thing the GG is telling me is that they know I contracted out and have told me I will also receive the below? Do I need to contact Future Pensions to find out if this info is correct? TIA

Contracted Out Pension Equivalent (COPE)​

Your COPE estimate is£56.25 a week.
This will not affect your State Pension forecast. The COPE amount is paid as part of your other pension schemes, not by the government.


In most cases the private pension scheme you were contracted out to:

• will include an amount equal to the COPE amount
• may not individually identify the COPE amount

The total amount of pension paid by your workplace or personal pension schemes will depend on the scheme and on any investment choices.

 

[Ivory55]

Im a carpenter and at 61 having done a day or two joist work or roofing I know I’ve done a days work.

Edit
Normally carpenters would move on to be foremen and site agents.

Ive already been and done it.
I couldn’t cope with tradesmen that didn’t give a toss about quality of finish.
Or those that couldn’t be bothered to turn up.
So I knocked that on the head.

Also years ago a bricklayer might finish his working life on the council doing maintenance work and now laying X amount of bricks a day, but a council work force is no longer here.

 

[Langtoftlad]

At BA... when I joined in 85, the unions had 'won' a concession to retire at 55 due to antisocial hours and jetlag, HMRC had agreed higher pension contributions were eligible for tax relief... everyone happy. Employee, employer, and tax man.

Roll on thirty years, government raids on pension schemes, longer life expectancy etc etc... no-one happy that retirement age is 55... too expensive for employer, too soon for employee, too little tax for HMRC. The three parties couldn't agree a change.

I'd done all my sums based on enforced retirement at 55 - would be a struggle but just about doable.

Then came the abolishment of enforced retirement ages... BA freaked and changed the pension scheme, I was delighted... no idea what HMRC made of it all.

I eventually retired from BA at 58... my original pension had been deferred 3 years so was boosted significantly. I took the revamped pension 2 years early so it was reduced slightly.

I was very lucky that the Gods aligned and enjoy a similar [if not slightly better] income than when I was working.
My state pension has been delayed a year, and has been cut due to being contracted out... but thanks to this thread... I can see a relatively easy path to maximise it.

After organising & paying for that - the next calculation/gamble will be whether to defer it, to improve it further?

 

[bigtwin]

this tells me I have 42 years of full contributions and my pension forecast is £175.20 which is the max and

It’s a little while since I looked at mine but Does it not say that £175.20 is the max YOU COULD get?

That doesn’t mean that £175 is the max you will get.

Ian

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[The Wino]

Yes and no, trying to change type of work when older is not that easy as your skills are nothing like what they need in today’s world.

I don't mean in a totally different area. Most people gain a lot of practical knowledge and skills. For instance if a firefighter can no longer carry people down ladders why not become a fire prevention or fire training officer. I'm pretty sure some do now but after retiring from the fire service.

 

[Minxy]

It’s a little while since I looked at mine but Does it not say that £175.20 is the max YOU COULD get?

That doesn’t mean that £175 is the max you will get.

Ian

Yes that's why mine says I could get £175 but at present I'm only entitled to the lesser figure due to my contributions, in other words if I top it up I will get £175 but if I don't I won't.

 

[Nasher]

After organising & paying for that - the next calculation/gamble will be whether to defer it, to improve it further?

There is a link, posted below, from which? That gives a 'payback time' of around 17 years

That said, if you work past retirement age, then it may be worth deferring it to save tax - in particular for 40% tax payers - another reason why people should get good advice

Should I defer my state pension? - Which?

You can defer or delay your state pension to boost the amount you get when you finally come to claim. Find out how much you'll get and whether or not it's a good deal.

www.which.co.uk

I should add that the pre 2016 deferral terms had a payback time of between 9 & 10 years, which is obviously much more beneficial - once again, more so if you are still working & paying tax

 

[Ditcha]

Hmm, I'm a bit confused by the state pension info above. I just logged onto the government gateway and this tells me I have 42 years of full contributions and my pension forecast is £175.20 which is the max and . I know I contracted out of SERPS for a few years (can't remember how many now) so presumably I will need to replace those years. The other thing the GG is telling me is that they know I contracted out and have told me I will also receive the below? Do I need to contact Future Pensions to find out if this info is correct? TIA

Contracted Out Pension Equivalent (COPE)​

Your COPE estimate is£56.25 a week.
This will not affect your State Pension forecast. The COPE amount is paid as part of your other pension schemes, not by the government.




In most cases the private pension scheme you were contracted out to:

• will include an amount equal to the COPE amount
• may not individually identify the COPE amount

The total amount of pension paid by your workplace or personal pension schemes will depend on the scheme and on any investment choices.

The cope amount is as it says an estimate of what you could get from the provider you contracted out to this figure being lower or higher does not affect the amount of state pension you receive and is only a guesstimate from the government.

When you do a online pension forecast you should have 2 figures one you would actually receive if you claimed it today and a second figure which is the max amount you could receive.

This is my figures I was contracted out have 38 years NI payments and a possible further 11 years to contribute, as you can see my today figure falls short of the max figure but only by a small amount so don't think it's worth paying a extra years NI to make up the small amount but I do have 11 years to make it up if I wish.

.

 

[Odd-no-more]

Although I'm happy with the way my pension has worked out, the one big mistake was putting the pension in my name, if we had split the pension contributions, we would pay no income tax at all now.

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[Minxy]

Although I'm happy with the way my pension has worked out, the one big mistake was putting the pension in my name, if we had split the pension contributions, we would pay no income tax at all now.

Have you done the 10% personal allowance transfer for married couples?

 

[The Wino]

Although I'm happy with the way my pension has worked out, the one big mistake was putting the pension in my name, if we had split the pension contributions, we would pay no income tax at all now.

You could do for a personal pension or sipp but I don't think many employers would be keen to contribute to a spouses pension!!
We both had equal personal pensions but with hindsight should have increased the contributions every year with inflation and what we could afford. In our defence at the time the rules on taking pensions were a lot more restrictive which was a disincentive also charges were higher and not transparent with a similar effect.

 

[Odd-no-more]

You could do for a personal pension or sipp but I don't think many employers would be keen to contribute to a spouses pension!!
We both had equal personal pensions but with hindsight should have increased the contributions every year with inflation and what we could afford. In our defence at the time the rules on taking pensions were a lot more restrictive which was a disincentive also charges were higher and not transparent with a similar effect.

Neither of us had a company pension and I started a pension after my employer arranged an interview with a financial advisor. It all stayed in my name even when we added to it, mainly because we gave it little thought. That mistake will now cost us paying £750 per year tax on a £10,000 drawdown, which we could have avoided.

 

[The Wino]

Neither of us had a company pension and I started a pension after my employer arranged an interview with a financial advisor. It all stayed in my name even when we added to it, mainly because we gave it little thought. That mistake will now cost is paying £750 per year tax on a £10,000 drawdown, which we could have avoided.

That like was for you explaining it not because you're having to pay the tax!!!
On the bright side you are paying 7.5 % tax but presumably had at least 20% relief on the contributions.

 

[coroner]

I think with the meltdown in paid employment thats on its way retirement should be an option at 60 give all the youngsters a chance and pay us old uns off early with unreduced state pensions.

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[Odd-no-more]

That like was for you explaining it not because you're having to pay the tax!!!
On the bright side you are paying 7.5 % tax but presumably had at least 20% relief on the contributions.

A lot of the contributions had 40% relief, I'm not complaining, it's just with a little more foresight we could have avoided it.

 

[Puddleduck]

When I did mine, I worked out what I needed to do - in my case pay for 2 years additional, as paying for a third year would have only put a few pence per week on my pension. I also worked out the total I needed to pay

I then telephoned the pension service in order to get the sort code, account & reference number to pay the additional contribution

The lady who took the call, once she had my details, told me exactly what I should do (i.e only pay 2 years as a third year wasn't worth it) plus the amount I needed to pay

I didn't need to work anything out myself (although, I already had) it was all done in a 90 second phone call

She also informed me that the transaction could take up to 12 weeks to appear on my state pension forecast - it was there after about 6 weeks

Given that Covid may mean reduced staffing levels, I'm guessing it may take a bit longer to get through.... But it was really very easy

Hope this helps

Martin's just done the same - we will make up 3 years. Just need to get it paid before 3 March so it shows up before he reached the magic birthday. The cash is in a 30 day notice investment as we always knew we would have 3 years to make up...... just need to get the timing right!

 

[Vipar]

I was quite lucky. I decided defer receiving my pension for 1year.
That way you get +10% but you lose what you would have received. during the waiting time there were 2 rises in the pension payout.
My pension is now just short of £1000pm glad that I chose to do it. In hindsight ( wonderful thing ) wished that I had done it for more years. If I remember rightly you could do it for a maximum of 5 years. I don’t know if that scheme is still going.
I have checked with IR just to make sure that I was not being overpaid. They confirmed that what I get is right

 

[The Wino]

I think with the meltdown in paid employment thats on its way retirement should be an option at 60 give all the youngsters a chance and pay us old uns off early with unreduced state pensions.

That would certainly benefit us greatly but be a real waste of money which is likely to be in really short supply too.
There are quite a lot like us who have budgeted to retire early with the current pension dates with savings available to cover the state pension bit until then. If they were to bring us the full state pension from now we would be quids in but it's hardly fair as the people them finding it easier to get jobs would be funding the early retirees but be very unlikely to get a pension at that age themselves.
They could of course calculate the total paid out in pensions and divide it between existing pensioners and the extra ones but it could be a tad unpopular

 

[Nasher]

A lot of the contributions had 40% relief, I'm not complaining, it's just with a little more foresight we could have avoided it.

That reminds me that whilst good financial planning is essential, a little bit of luck can help

In March 2009 my last full tax year of employment, the stock market was in the doldrums following on from the 2008 crash

I decided to put enough into a new pension fund to cover my 40% tax payment for the year. I figured the stock market would recover and the fund would grow

The plan was to take 25% tax free and take a small annuity when the time was right

However, the bestest chancellor in the whole wide world ever, George Osborne, gave us our pension freedoms in 2016

My investment had tripled, I got 25% tax free and drew down the maximum I could each year to use up my tax allowance - so effectively tax free (until my state pension kicked in an took me over the tax threshold)

My best financial investment ever - obviously, my investments over the years in motorcycles and paragliders has given me way more pleasure - and cost me an absolute fortune - worth every penny

I suppose I should add that when I retired at 54, I took a 90% drop in income and no 'free' company car!!

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[Andyfozz]

My advice is go for it. Life is short and cruel. If things become tight you can always change it. But life is for living and enjoying. Nobody gets out alive.

 

[ceejayt]

For me the best and brilliant change was the switch that said an annuity was not a requirement - and draw down became available.

That transformed my retirement plans - an annuity now would just about pay for petrol once a month! I am lucky I have a good fund to draw down on plus a final salary scheme from a previous job.

In addition, when I was about 21 (40+ years ago) I was persuaded to take out a small personal pension with Scottish Equitable - started paying £20 per month and on and off as jobs changed I paid in and created a small pot off just over £30k. I had the option to take out out but better still it guaranteed an annuity of 10% so I opted to get a single payment every year of £3.2k which pops into my bank every year at the beginning of December and takes care of Christmas. Can't get a policy like that any more.

Life is certainly for living and you can't take it with you.

C

 

[Garfields]

I think with the meltdown in paid employment thats on its way retirement should be an option at 60 give all the youngsters a chance and pay us old uns off early with unreduced state pensions.

Nice idea
Never going to happen
Though you can retire whenever you want
Getting any pension is the problem

 

[Cairngorm]

I was quite lucky. I decided defer receiving my pension for 1year.
That way you get +10% but you lose what you would have received. during the waiting time there were 2 rises in the pension payout.
My pension is now just short of £1000pm glad that I chose to do it. In hindsight ( wonderful thing ) wished that I had done it for more years. If I remember rightly you could do it for a maximum of 5 years. I don’t know if that scheme is still going.
I have checked with IR just to make sure that I was not being overpaid. They confirmed that what I get is right

Hi don’t know when you did that. I decided to defer as I didn’t need the money and was going to leave as late as I could. I came across a Which supplement on pensions which I sat down to read. Went to the part about deferring and discovered that in old scheme you got 10%, but after 2016 the rate dropped to 5% and the pay back due on the way DWP worked out the interest rate, meant that it took 17 years to get back into a payback position.
I am 66 now, so felt that a complete waste of time.
I was self employed and sold my business a year ago and although I did seek out financial advice ( pertaining to pension pot) before retiring. However I should have sought advice about pension carry forward, so I have had more tax relief in the following three years.
Everyday is a school day.

 

[Odd-no-more]

Hi don’t know when you did that. I decided to defer as I didn’t need the money and was going to leave as late as I could. I came across a Which supplement on pensions which I sat down to read. Went to the part about deferring and discovered that in old scheme you got 10%, but after 2016 the rate dropped to 5% and the pay back due on the way DWP worked out the interest rate, meant that it took 17 years to get back into a payback position.
I am 66 now, so felt that a complete waste of time.
I was self employed and sold my business a year ago and although I did seek out financial advice ( pertaining to pension pot) before retiring. However I should have sought advice about pension carry forward, so I have had more tax relief in the following three years.
Everyday is a school day.

When I started to receive my state pension, I put all of it and more into my drawdown pension and got 40% tax relief on it. Unless you are already paying in the full £40,000 pay any excess into o pension.

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